By Charlene Crowell
Wherever you live, or whatever your household size, home is a special place where children are raised, and memories are made. Owning a home is also the largest, single investment that most families make in a lifetime.
Since the nationwide housing crash, family outcomes have varied. While some households have witnessed full recovery, others – often people of color – wonder when or how they too can turn the proverbial financial corner.
Now, nine national civil rights organizations are demanding to know why related deliberations of a key policy issue now underway with both the U.S. Senate Banking Committee and its counterpart, the House Financial Services Committee, are being conducted in private: the future of affordable homeownership.
“Our constituents represent the majority of future homebuyers, and any system that is not structured so as to ensure that they have fair access to safe and sustainable mortgages will not serve the country well,” wrote the coalition, to leadership of both committees on December 15.
Signing the letter were: The Leadership Conference on Civil and Human Rights, the National Coalition for Asian Pacific Community Development, the Center for Responsible Lending, National Fair Housing Alliance, NAACP, UNIDOSUS (formerly known as the National Conference of La Raza), National Urban League, National Community Reinvestment Coalition and the Lawyers’ Committee for Civil Rights Under Law.
“At a time when the national homeownership rate is declining, and local rents are skyrocketing, every effort should be made to increase sustainable homeownership opportunity and make rental housing more affordable,” the coalition continued. “Alternative facts and false math should not be used to undo the access and affordability provisions that have helped secure opportunity for hardworking families for more than 25 years.”
Central to these discussions is the future of two Government Sponsored Enterprises (GSEs) – Fannie Mae and Freddie Mac. During the housing crisis, The Federal Home Loan Corporation, more commonly known as Freddie Mac, and the Federal National Mortgage Corporation – Fannie Mae – went into federal conservatorship. As a result, the entities created decades ago by Congress to reduce the cost of credit for low and moderate-income house- holds, has remained in government control.
Now, as much of the housing market has recovered, questions are being posed as to when or how the two GSEs will return to private operations. Secondly, as housing costs continue to soar for renters and homeowners alike, affordable housing is a growing concern nationwide. Without an affirmative policy in place, many low-and-moderate-income consumers, as well as consumers of color could easily question whether fair access to mortgage credit will be possible for them.
For their part, the civil rights organizations’ letter gave committee chairs a list of 10 items that if left unaddressed will trigger organized opposition:
- Align with and support longstanding federal anti-discrimination laws and enforcement;
- Provide adequate capital to protect taxpayers and housing system;
- Serve all credit-worthy borrowers;
- Eliminate and ban excessive risk-based pricing;
- Serve all markets across the country throughout the business cycle;
- Require utility regulation and expand restrictions that prevent risky behaviors;
- Ensure equal treatment for small lenders;
- Promote cost-effective loan modifications;
- Strengthen FHA and preserve low down payment mortgage loans; and
- Address the federal government’s history in fostering racially discriminatory mortgage lending policies.
Historically, Blacks and other consumers of color have experienced difficulties accessing private, conventional mortgage loans. According to the most recent data from the Home Mortgage Disclosure Act, Blacks and Latinos together received only 9 percent of 2016’s 2,123,000 conventional mortgage purchase loans. The data additionally shows that Blacks alone received just 3.1 percent or 65,451 of these loans, the ones that come with fewer fees and are the most cost-efficient over time. By contrast, Black mortgage borrowers received 142,329 out of 866,000 Federal Housing Administration (FHA) loans during the same year.
Should housing finance reform fail to preserve access and affordability in mortgage lending, these data points could worsen and become even more disproportionate.
For Nikitra Bailey, an EVP with the Center for Responsible Lending, a firm commitment to affordable housing goals is essential to any housing policy discussion.
“The GSEs’ affordable housing goals have made a tremendous impact on helping credit worthy borrowers purchase homes,” noted Bailey. “They are also a metric for accountability to address underservice to important and often excluded market segments, including people of color, low and moderate- income families, and rural communities. The goals must be strengthened and fully enforced, not rolled back.”
Similarly, the nation’s oldest minority professional real estate organization echoed Bailey’s concerns in a report released earlier this year.
“We must remain vigilant,” said Ron Cooper, president of the National Association of Real Estate Brokers in the foreword of the organization’s report, 2017 State of Black Housing in America. “We must continue to advocate that the GSEs stay true to their intended mission to promote homeownership and adhere to the housing goals and Duty to Serve Clause.”
Charlene Crowell is the communications deputy director with the Center for Responsible Lending. She can be reached at [email protected].